TweetDeck Can't Cure Twitter's Zero Growth Problem

Amplify bots often follow, tweet, retweet, and otherwise engage in what Twitter would call an “active” manner, and can be generally indistinguishable from many average Twitter users (and, thus, counted as MAUs). Just as alarming, the type, number, and sophistication of “networked” bots (a collective group with a focused agenda) has grown considerably over the past two years.

How big is this bot issue?

Huge.

In 2014, Twitter acknowledged “approximately 8.5% (23m) of its 288m MAUs could potentially be bots.” In early 2017, a research team from the University of Southern California and Indiana University estimated that in 2016, 15% (48m) of Twitter’s 319m MAUs were bots.

Backing this up, an additional study by Oxford University revealed that “between the first two presidential debates, a third of pro-Trump tweets and nearly a fifth of pro-Clinton tweets came from automated accounts.” It’s clear that bots have become more common, and more active (and more likely to influence the MAU numbers).  

Assuming these numbers are valid, in 2014 the actual “non-bot” MAU count was around 265m. In 2016, the actual “non-bot” MAU count would have been around 271m. Assuming a steady growth of bots between 2014 and 2016 (which is generous to Twitter), this yields a 1.13% non-bot MAU Y/Y growth rate in 2015 and a 1.12% non-bot MAU Y/Y growth rate in 2016.

If we assume even a slight increase in the rate of bot deployment during 2016 (over 2015), we very quickly arrive at a scenario where Twitter’s human MAU count is either completely flat or declining Y/Y.

Bottom Line

Twitter clearly has an issue here, one that may, along with its “troll” issue, have strongly influenced the decision of suitors to walk away from rumored M&A deals with Twitter in 2016. While we believe that Twitter has extensive value in its data, and that the expansion of TweetDeck is long overdue, we do not believe those values justify its present valuation.

Twitter may be a compelling acquisition (as we've discussed previously), but we do not believe this new paid version of TweetDeck will save Twitter. At this point, it’s not a fruitful investment.

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Disclosure: I am/we are long FB, MSFT; I am/we are short AAPL. 

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Kurt Benson 3 years ago Member's comment

Excellent analysis of the challenges facing #Twitter. $TWTR

Fred McClimans 3 years ago Contributor's comment

Thanks, Kurt - I appreciate the feedback! Twitter is one of those companies/equities that has had tremendous potential. As a user, I rely upon it every day. As an investment, however...